S&P downgrades S.A credit rating to BB+

Last night, S&P downgraded South Africa's long-term foreign currency rating to BBPlus, other known as subinvestment or junk status. And the long-term local currency rating is at B-B. This significant move has sparked discussions and concerns across various sectors in the country. The downgrade is expected to have far-reaching effects beyond just banks and financial institutions, impacting every individual in the nation. Experts believe that this macroeconomic effect will ripple through the broader economy, influencing various aspects of daily life. Chris Becker from Investec Prime Services highlighted the anticipated nature of this downgrade, stating that much of it had already been factored into the market. He emphasized the political environment within South Africa and globally, citing events like Brexit and the uncertainty surrounding the US economy as contributing factors to the current financial landscape. The market's reaction to the downgrade has been somewhat subdued, with potential positive outcomes like mobilizing public resistance for change within the government. John Taylor, a Marketing Actuary at Liberty Corporate, echoed these sentiments, noting the long-anticipated risks associated with political instability in South Africa. However, he reassured investors about the country's ability to honor its debts, particularly in local currency, maintaining majority investment-grade status. Dr. Uran Ferndale, the CEO of Jet Stores, highlighted the potential impact on consumers, citing the weakening currency's effect on import costs and subsequent pricing adjustments. Despite the challenges, he pointed to opportunities for increased local sourcing and job creation as a silver lining amid the economic concerns. The general mood among consumers remains cautious, with concerns about short-term confidence and spending patterns. While some view the downgrade as a warning shot, others see it as an opportunity for collaborative efforts between business, government, and civil society to drive meaningful change. The broader question looms regarding the duration and depth of this downgrade's impact. With Moody's review pending and potential future downgrades on the horizon, the country's policy shifts and economic strategy will be critical in determining its long-term trajectory. The possibility of a pro-growth ideological shift akin to Colombia's success story offers a glimmer of hope for a path back to investment-grade status. Despite the uncertainties and challenges ahead, South Africa's resilience and history of overcoming obstacles signal a potential route towards economic recovery and stability.